I am an employee of a non profit organization who conducts 100% of our business online. We would like to hire someone at a full time position, who lives outside the US. They are not US citizens, not US residents. Is it legal to hire this person and pay them a full time wage?

I think that the foreign person can not be your regular employee. From your regular employee you must hold employment taxes, and how you will account that for a foreign alien.

MukatA:

I do not think you are correct here.

There is no legal restriction that I know of that would prevent Serena's organization from hiring someone from outside of the U.S.

However, this is REALLY NOT a tax question, but rather an employment issue that should be addressed on a difference forum.