QuickBooks Desktop Payroll Error PS038 – Causes and Solutions

QuickBooks Error PS038 shows up when running payroll or updating tax tables in QuickBooks Desktop. The error usually appears even after updating payroll and validating your subscription. The main culprit? Paychecks are stuck with the status “Online to send.” 

When this happens, payroll and updates stop working until the issue is fixed. This article explains the causes of PS038, how to resolve it, and tips to avoid it in the future. 

Causes of QuickBooks Payroll Error PS038 

Error PS038 usually stems from issues with payroll data, subscription validation, or program files. The most common causes are: 

• Stuck online paychecks: Paychecks marked “Online to send” that never transmit to Intuit. 

• Outdated QuickBooks Desktop: Running an old release can block payroll updates. 

• Data corruption: File integrity issues can stop paychecks from being sent. 

• Inactive subscription or wrong service key – QuickBooks cannot verify payroll entitlement. 

• Internet or security blocks – Firewalls or antivirus software prevent QuickBooks from connecting to Intuit. 

• Corrupted CPS folder – Damaged payroll update files disrupt updates. 

Understanding these causes makes it easier to apply the right fix. 

Solutions to Fix QuickBooks Error PS038 

There are several ways to fix Error PS038. You don’t need to try them all—start with Method 1 and move down the list until QuickBooks opens without errors. After completing each step, restart QuickBooks to check if the issue is resolved. 

Method 1: Update QuickBooks and Send Payroll Data to Intuit 

Since stuck paychecks are the top reason for PS038, start by updating QuickBooks and sending pending payroll data. 

Step 1: Update QuickBooks: Go to Help → Update QuickBooks Desktop → Update Now → Get Updates. Restart QuickBooks once the updates are installed. 

Step 2: Send usage data: Go to Employees → My Payroll Service → Send Usage Data (or Send Payroll Data if that option isn’t available). 

Step 3: Transmit payroll information: In the Send/Receive window, click Send All and enter your payroll PIN if prompted. 

Step 4: Retry payroll update: Go to Employees → Get Payroll Updates → Download Entire Update. 

Note: Sending usage or payroll data simply pushes pending items (like unsent paychecks or forms) to Intuit’s servers. In many cases, this clears the backlog that causes PS038. 

Method 2: Find Stuck Paychecks and Run Verify/Rebuild Data 

If PS038 persists, find any paychecks marked “Online to send” and repair file issues. QuickBooks’ Verify Data and Rebuild Data tools can fix corruption and clear stuck transactions. 

Step 1:  

• Locate stuck paychecks – Go to Edit → Find → Advanced.  

• Set filters: Detail Level = Summary Only, Online Status = Online to send.  

• Click Find to list paychecks. 

Step 2: Verify data – Go to File → Utilities → Verify Data. Let QuickBooks scan for issues. 

Step 3: Rebuild data – Go to File → Utilities → Rebuild Data. Create a backup when prompted, then allow the process to complete. 

Step 4: Re-verify (optional) – Run Verify again to confirm no errors remain. 

Step 5: Test payroll update – Try downloading updates again. 

If PS038 still appears and paychecks remain unsent, continue to the next method to manually correct the stuck transactions. 

Method 3: Edit and Save (Toggle) Each Stuck Paycheck 

If paychecks remain stuck even after running Verify and Rebuild, you can “toggle” them to refresh their status.  

This involves opening each stuck paycheck, making a temporary edit, saving it, then reversing the change. The process does not affect payroll amounts but forces QuickBooks to reprocess the paycheck internally. 

Steps to Toggle Stuck Paychecks 

1. Open the oldest stuck paycheck. 

2. Click Paycheck Detail. Add a duplicate line of the last earnings item. 

3. When prompted with a Net Pay Locked message, click No to keep amounts unchanged. 

4. Save the paycheck. 

5. Reopen it, return to Paycheck Detail, and delete the duplicate line. 

6. Save again. 

Repeat this for all stuck paychecks, and then attempt the payroll update. This process forces QuickBooks to re-save the paycheck, usually clearing its “Online to send” status. 

Why Method 3 Works: Intuit recommends this “toggle” process. Adding and then removing an earnings line forces QuickBooks to re-save the paycheck, which usually clears the “Online to send” status. When no pending transactions remain, payroll updates should proceed without the PS038 error. 

Tip: If you have many stuck paychecks, this process can be time-consuming. Take care to ensure net pay and taxes do not change on any paycheck. If you’re uncomfortable editing historical payroll records, consider moving to Method 4 or contacting a professional for assistance. 

Method 4: Verify Your Payroll Subscription and Service Key 

Sometimes, Error PS038 happens because QuickBooks cannot verify your payroll subscription. If the subscription is inactive or the service key is missing/incorrect, payroll updates will fail. Checking and refreshing this information can resolve the issue. 

Steps to Verify Payroll Subscription 

Step 1: Open Service Key Manager: In QuickBooks Desktop, go to Employees → My Payroll Service → Manage Service Key. (If you have multiple company files, do this in the main file where payroll is active.) 

Step 2: Check subscription status 

• In the Service Keys window, look under Status. 

• If it shows Active, continue to the next step. 

• If it shows Inactive or Expired, renew your subscription before proceeding. 

Step 3: Verify the service key 

• If the subscription is active, click Edit. 

• Confirm that the 16-digit service key matches the one provided by Intuit. 

• If missing or incorrect, enter the correct key. 

Step 3: Save and refresh 

• Click Next, uncheck Open Payroll Setup (if selected), then click Finish. 

• QuickBooks may validate your service and attempt to download updates automatically. 

Step 4: Retry the payroll update 

• Go to Employees → Get Payroll Updates → Download Entire Update. 

• If the subscription information was the issue, the update should now complete without PS038. 

Note: If your subscription was inactive, you may need to restart QuickBooks after renewing it and then re-run the update. Payroll updates (including tax tables) require an active subscription, so without one, PS038 or similar PS-series errors will continue to appear. 

Method 5: Rename the QuickBooks CPS Folder (Payroll Update Folder) 

QuickBooks saves downloaded payroll updates in a folder named CPS inside its program files. If this folder or its contents are damaged, payroll update errors such as PS038 may occur. Renaming the CPS folder forces QuickBooks to create a fresh one and download new update files, often resolving the issue. Ensure QuickBooks is not running before making file changes. 

Steps to Rename the CPS Folder 

Step 1: Locate the CPS folder 

• Open File Explorer and go to: 

• C:\Program Files (x86)\Intuit\QuickBooks <Year>\Components\Payroll\CPS 

• Replace <Year> with your QuickBooks version (e.g., QuickBooks 2023). 

• If you use 64-bit QuickBooks or have installed it elsewhere, adjust the path accordingly. 

Step 2: Rename the folder 

• Right-click on the CPS folder and select Rename. 

• Change the name to something like CPSOLD or CPS_Old (this keeps a backup). 

Step 3: Download payroll updates again 

• Reopen QuickBooks. 

• Go to Employees → Get Payroll Updates → Download Entire Update. 

• QuickBooks will automatically create a new CPS folder and download fresh update files. 

Step 4: Check if the error is resolved 

• Try running payroll or downloading updates again. 

• If the error was caused by corrupted CPS files, it should now be fixed. 

Note: Renaming (not deleting) the CPS folder is safer, since you can restore it if needed. This method clears out potentially corrupted payroll update files and gives QuickBooks a clean slate. If PS038 persists, the problem may be related to your company file or system environment rather than the CPS folder. 

Method 6: Repair QuickBooks Desktop Program (Using QuickBooks Tool Hub) 

If the previous methods don’t fix PS038, the issue may lie in the QuickBooks program itself. Intuit provides QuickBooks Tool Hub, a free utility designed to resolve common Desktop problems. Using its built-in tools can repair errors that interfere with payroll updates. 

Step 1: Download and Install QuickBooks Tool Hub 

1. If you don’t already have it, download the latest QuickBooks Tool Hub (version 1.6 or later) from Intuit’s official website. 

2. Close QuickBooks. 

3. Run the installer (QuickBooksToolHub.exe) and follow the on-screen steps. 

4. Once installed, open Tool Hub from the desktop icon. 

Step 2: Run Quick Fix My Program 

1. In Tool Hub, select the Program Problems tab. 

2. Click Quick Fix my Program. 

• This will close any QuickBooks processes and run a quick repair. 

• The process usually takes just a few minutes. 

3. When it finishes, reopen QuickBooks and your company file. 

4. Try downloading payroll updates again. 

Step 3: Run QuickBooks Install Diagnostic Tool 

1. If the error remains, open Tool Hub again and go to the Installation Issues tab. 

2. Select QuickBooks Install Diagnostic Tool. 

• This scans for and repairs installation issues (e.g., .NET framework problems, missing DLLs) that may affect payroll. 

• The scan can take up to 20 minutes. 

3. Restart your computer after the repair. 

4. Open QuickBooks and attempt the payroll update again. 

Method 7: Repair the Company File with File Doctor 

If PS038 still appears after previous fixes, the cause may be deeper corruption in your company file, especially in payroll data. QuickBooks File Doctor, included in the Tool Hub, can scan and repair file damage as well as network issues. 

Steps to Use QuickBooks File Doctor 

1. Open QuickBooks Tool Hub → Company File Issues → QuickBooks File Doctor. 

2. Select your company file from the list (or browse to it). 

3. Choose Check your file → Continue. 

4. Enter the Admin password and start the scan. 

5. Wait for File Doctor to finish, then reopen QuickBooks and test payroll updates. 

If File Doctor reports issues but PS038 continues, consider restoring a recent backup of your company file. 

Method 8: Check Firewall and Security Settings 

At times, firewalls or antivirus software can block QuickBooks from connecting to the internet, preventing payroll updates and causing errors like those in PS038. To rule this out, make sure QuickBooks has the access it needs. 

Step 1: Configure Firewall Settings 

• Confirm that your Windows Firewall or third-party firewall allows QuickBooks internet access. 

• QuickBooks Desktop uses ports 80 and 443 for payroll and updates—ensure these are open. 

• Add QuickBooks programs (e.g., QBW32.exe) as firewall exceptions. 

• If unsure, you can test by temporarily disabling your firewall and retrying the payroll update. If the update works while the firewall is off, adjust the firewall settings accordingly. 

• Tool Hub also provides a utility under the Network Issues tab to help with firewall troubleshooting. 

Step 2: Check Antivirus Settings 

• Some antivirus or anti-malware programs may block QuickBooks connections. 

• Add QuickBooks to the exceptions or allowed list of your antivirus software. 

• As a test, temporarily disable your antivirus while running the payroll update. If the update works, configure your antivirus to permanently trust QuickBooks. 

Step 3: Verify Internet Settings 

• QuickBooks Desktop relies on Internet Explorer/Edge settings. 

• Confirm that TLS 1.2 is enabled in Internet Options. 

• On older systems, update the browser environment to avoid compatibility issues. 

Test the Payroll Update 

After adjusting your firewall, antivirus, or internet settings, retry the payroll update: 
Employees → Get Payroll Updates → Download Entire Update. 

If the update now works, PS038 was likely caused by blocked connectivity. 

Best Practices to Prevent Error PS038 

To reduce the chances of encountering QuickBooks Payroll Error PS038 in the future, follow these best practices: 

Send payroll data regularly 

• After each payroll run, go to Employees → My Payroll Service → Send Usage Data. 

• Avoid leaving paychecks in “Online to send” status for long periods. 

Keep QuickBooks updated 

• Always install the latest QuickBooks Desktop updates and payroll tax table updates (at least every 45 days). 

• Updates ensure compatibility and include fixes for known issues. 

Maintain an active payroll subscription 

• Keep your payroll subscription active and billing information current. 

• If your business details change or you renew, update the service key in QuickBooks. 

Back up your company file regularly 

• Create backups before and after payroll runs or major changes. 

• Consider scheduling automatic backups for extra protection. 

Run periodic file maintenance 

• Use Verify Data monthly (or around payroll periods) to catch problems early. 

• If errors appear, run Rebuild Data to fix them before they cause issues. 

Ensure reliable internet and security settings 

• Use a stable internet connection when updating payroll. 

• Configure firewalls/antivirus to allow QuickBooks access on required ports (80, 443). 

Run QuickBooks with proper permissions 

• Launch QuickBooks as an administrator when sending payroll or installing updates. 

• Perform payroll updates in single-user mode for best results. 

Conclusion 

If the issue persists after you’ve followed all the methods outlined here, it may require deeper investigation. At that point, consider contacting QuickBooks Support or working with a certified QuickBooks ProAdvisor. They can assist with advanced troubleshooting or specialized data repairs. 

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