What the CAWR reconciliation compares
The IRS-CAWR program compares "the employer's data provided to the IRS on Forms 941, 943, 944, 945 or Schedule H to the data provided to SSA on Forms W-2/W-2-C and/or to the IRS on Forms 1099-R and W-2-G" (IRM 4.19.4.11(2), Mar. 28, 2018). On the withholding side, the information returns in play are Forms W-2, 1099-R (document type 98) and W-2G (document type 32). The manual's note is the whole boundary: "The only information returns filed with IRS that may include FIT are the Form 1099-G, Form W2-G, and Form 1099-R... Form 1099-G FIT amounts are not included in the reconciliation balancing phase of CAWR" (IRM 4.19.4.2.3(1) Note, Apr. 14, 2020). Backup withholding on Forms 1099-NEC, MISC, INT and DIV is not named anywhere in the section, so a Form 945 built from it has nothing on the information-return side to tie to.
How the screener closes a backup-withholding case without writing
"When the only (or only remaining) discrepancy is for FIT and the exact amount is reported as Backup Withholding (BUWH) on the Form 945 and no other BUWH is required to be reported," the examiner researches PMFOL, the Payer Master File built from Form 1096 transmittals, for the discrepant amount; a match closes the case in screening with a zero-dollar adjustment on the Form 945 module (IRM 4.19.4.2.3(1) to (3)). "When the BUWH is more than the discrepant amount, and PMFOL shows the remaining BUWH amount on another information return," same result. "When the BUWH is less than the discrepant amount, or there are other fields that remain discrepant, issue correspondence" (IRM 4.19.4.2.3(4)). The checker applies those three sentences to your figures: the Form 945 total is compared to the 1099-R and W-2G withholding, and the leftover is compared to the backup withholding your other 1099s reported.
The line 2 trap
"The amounts reported on Forms 1099-R and W2-G are not generally subject to Backup Withholding, so the amount shown is Federal Income Tax Withheld" (IRM 4.19.4.3.32(1), Feb. 1, 2008). When a payer says its 1099-R withholding was reported as backup withholding, the IRS sends Letter 2057-C "informing the taxpayer that Forms 1099-R are not subject to Backup Withholding and that we have adjusted their account accordingly" (IRM 4.19.4.3.32(2)). The account ends up right; the case still opened. The checker flags line 2 whenever it exceeds the backup withholding your other 1099s show, because that excess is what PMFOL will not confirm.
When the 1099-Rs exceed the Form 945
"Discrepancies are usually caused when the taxpayer fails to file Forms 945/1099-R or has a third party administrator." If 1099-Rs are on file and no Form 945 was filed, the third-party administrator's EIN resolves the case with a cross-reference on both accounts. If a Form 945 was filed but "Form 1099-R (Doc Code 98) money amounts are more than Form 945" and no explanation is given, the IRS assesses the difference on the Form 945 module and may assess a failure-to-deposit penalty (IRM 4.19.4.3.33(1), Apr. 22, 2022). Assistors are told to ask "if withholding could have been reported under the plan administrator's EIN" (IRM 4.19.4.11.1(3), June 11, 2025).
The manual does not state the dollar tolerance below which a CAWR case is not worked; those figures are redacted (IRM 4.19.4.2.14(5) and (6), Exhibit 4.19.4-4). A small difference here may never become a letter, but the checker does not guess at the line.