The IRS has issued interium guidance and a detailed FAQ on changes to the Individual Taxpayer Identification Number (ITIN) application process. An ITIN is a number similar to a Social Security number which is issued by the IRS to taxpayers who are not eligible for Social Security numbers but need a tax identification number for tax filing and other purposes. Household employees who are not eligible for a SSN are almost always aliens working without valid US work authorization. Families who hire these undocumented workers are in violation of US immigration law and are still legally responsible to report and pay all employment taxes.The IRS is making changes to the ITIN application process in response to documented tax fraud associated with these identification numbers.
HomeWork Solutions has a detailed explanation of issues surrounding employment of undocumented workers in it's FAQ.