Paychex: Sold an ERC Service to Its Clients

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Article: How Much Did Itria Ventures Make From Pandemic Relief?

Identity and role

Paychex, Inc. provides payroll, HR, benefits and insurance services to small and midsize businesses, and runs a professional employer organization (PEO) that co-employs clients' workers. Its fiscal year ends May 31.

Pandemic-relief role

Paychex's fiscal 2022 annual report introduced the product: "Paychex Employee Retention Tax Credit ('ERTC') Service, which helps businesses retroactively identify tax credits, based on wages already paid, and file amended returns to claim the credit." The same report also lists it among its business services, as a service that "proactively helps businesses retroactively identify tax credits available under the COVID-19 Cares Act."

The Employee Retention Credit (ERC) covered 2020 and 2021 wages. Paychex's service claimed it after the fact, on amended returns, from wage records it already held as the payroll provider.

For PEO clients the filing was aggregated. Paychex's ERTC page tells them: "ERTC claims from Professional Employer Organizations (PEOs) are filed on an aggregate level. That means your claim was filed under Paychex's FEIN, rather than under your individual business FEIN. You should not contact the IRS, since only authorized Paychex representatives can discuss the status of our PEO accounts with the IRS." It blames the delays on the IRS review that followed "the processing moratorium in September 2023," says Paychex works with the National Association of Professional Employer Organizations "advocating on behalf of our PEO clients for IRS progress on ERTC," and points clients to "advance loans on your Employee Retention Tax Credit with discounted interest rates."

After the credit

The fiscal 2024 annual report attributed "lower revenue from ancillary services, primarily due to the expiration of our Employee Retention Tax Credit Service." The fiscal 2025 report said the same about the "expiration of our Employee Retention Tax Credit ('ERTC') program," and that operating income for the year "was impacted by the acquisition of Paycor and the expiration of the ERTC program." The reports do not state the service's revenue.

The IRS's 2025 Chief Counsel memo on aggregate filings, PMTA 2025-01, concluded that an aggregate Form 941 or 941-X filed under a third-party payer's own EIN without a Schedule R allocating the credit among clients is not a valid return for those clients. The memo does not name Paychex.

Legal status / controversies

No enforcement action against Paychex over the ERC appears in the records we reviewed.

Where they are now (2025–2026)

Paychex's ERTC page was still online in September 2026, answering questions from PEO clients waiting on refunds.

Paychex