QuickBooks Payroll Error PS107: Fix the Damaged Update File

You run a payroll update and QuickBooks stops with “Error PS107: An internal file in QuickBooks has become unreadable.”

Why: QuickBooks can’t read a file it needs to install the payroll update — most often a damaged file in the CPS (update components) folder, but it can also be a subscription it can’t verify or a firewall blocking the download. Start with the release/subscription checks, then clear the damaged file.

Fix 1: Update QuickBooks to the latest release and verify your subscription

1. Close all company files and restart your computer (PS107 sometimes clears on a clean reboot alone).
2. Help → Update QuickBooks Desktop → Update Now → tick Reset Update → Get Updates. Reopen and install when prompted.
3. Employees → My Payroll Service → Manage Service Key — confirm the Service Name is correct and Status shows Active. Click Edit, verify the service key, then Next → Finish.
4. Retry Employees → Get Payroll Updates → Download Entire Update → Update.

Fix 2: Run Quick Fix my Program and add an antivirus exclusion

A security tool that quarantines an Intuit file mid-download produces exactly this “unreadable file” symptom.

1. Add a Windows Defender / antivirus exclusion for your QuickBooks folder, or temporarily turn off real-time protection.
2. Open the QuickBooks Tool Hub → Program Problems → Quick Fix my Program.
3. Reopen QuickBooks, update to the latest release, then retry the payroll update.

Fix 3: Rename the CPS folder (the core PS107 fix)

This is the step that resolves most PS107 cases — it forces QuickBooks to discard the damaged components and build clean ones.

1. Close QuickBooks completely.
2. Open the QuickBooks folder for your version, e.g. C:\Program Files (x86)\Intuit\QuickBooks YEAR\Components\Payroll.
3. Right-click the CPS folder → Rename → type CPSOLD → press Enter.
4. Reopen QuickBooks and run Employees → Get Payroll Updates → tick Download Entire Update → Update. A fresh CPS folder is created automatically.

FAQ

Where exactly is the CPS folder? Inside your QuickBooks install folder under Components\Payroll\CPS. If you can’t see Program Files (x86), you’re on a 32-bit-only path — look under Program Files instead. Show hidden files if the Components folder doesn’t appear.

Do I lose anything by renaming CPS to CPSOLD? No. CPS only stores downloaded update files. Your company file, paychecks, and payroll history are untouched, and QuickBooks rebuilds CPS on the next download.

It worked, then PS107 came back next month. That points to antivirus re-quarantining the file each download. Keep the QuickBooks folder excluded from your security tool’s scans.

Sources: Intuit — Fix PSXXX errors when downloading payroll updates, Intuit — Fix PSXXX errors