And they aren’t paying taxes as a sole proprietor who has to pay taxes to be in business, either.
Hiring Employees
If you hire employees there is information that you need to secure for your records and forms that you must complete.
Eligibility to Work in the United States
You must verify that each new employee is legally eligible to work in the United States. Have the employees you hire fill out Form I-9, Employment Eligibility Verification (PDF).
Employee's Social Security Number (SSN)
You are required to get each employee's name and Social Security Number (SSN) and to enter them on Form W-2. (This requirement also applies to resident and nonresident alien employees.) You should ask your employee to show you his or her social security card. The employee may show the card if it is available. You may, but are not required to, photocopy the social security card if the employee provides it. Record each new employee's name and social security number from his or her social security card. Any employee without a social security card should apply for one using Form SS-5, Application for Social Security Card (PDF). The Social Security Administration (SSA) offers social security number (SSN) verification and quick access to relevant forms and publications.
Do not accept an ITIN in place of an SSN for employee identification or for work. An ITIN is only available to resident and nonresident aliens who are not eligible for U.S. employment and need identification for other tax purposes. You can identify an ITIN because it is a 9-digit number, beginning with the number "9" and is formatted like an SSN (NNN-NN-NNN).
Note: An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN.
So, the IRS points out the I-9 requirement along with the fact that it's easy to tell an ITIN from an SSN. But that's where it ends.