Risks and Implications of Housing Immigrants Without Federal, State, Local, and IRS Compliance in Texas

Author: Serwaa Akua Manu

Date: January 10, 2026

University of Justice

Residential neighborhood in Texas showing diverse housing types

Immigration has shaped Texas for decades, influencing its economy, culture, and communities. Between 2015 and 2026, the state has experienced significant shifts in immigration patterns, accompanied by complex challenges and risks. This post explores key data on immigration encounters, population estimates, and risk factors tied to housing and employment compliance. Understanding these trends helps policymakers, landlords, and residents navigate the evolving landscape responsibly.

Immigration Encounters Along the Southwest Border

The U.S. Department of Homeland Security (DHS) reported over 2.8 million immigration encounters along the Southwest border from fiscal year (FY) 2015 through FY 2023. Texas accounted for more than 40% of these encounters, reflecting its role as a primary entry point. In FY 2023 alone, Texas recorded over 1 million encounters, underscoring ongoing migration pressures.

These encounters include apprehensions and other interactions with Customs and Border Protection (CBP) agents. The high volume indicates persistent migration flows and enforcement activity. For example, CBP data shows spikes in encounters during certain months, often linked to seasonal migration patterns or policy changes.

Texas Immigrant Population Overview

Texas hosts a large immigrant population, with estimates from the Pew Research Center (2023) indicating about 4.8 million immigrants live in the state. This group represents roughly 17% of Texas’s total population. Among these immigrants, approximately 1.2 million are undocumented, highlighting the challenges of legal status and access to services.

IRS data from 2022 reveals that over 1.1 million Individual Taxpayer Identification Numbers (ITINs) were issued in Texas. Many of these ITIN holders claim dependents on tax returns, reflecting the presence of immigrant families contributing to the state’s economy despite lacking Social Security numbers.

The U.S. Census Bureau (2023) reports that around 35% of renter households in major Texas cities such as Houston, San Antonio, and Dallas include at least one non-citizen. This statistic points to the significant role immigrants play in the rental housing market.

Risks Linked to Non-Compliant Rentals and Employment

Certain rental practices and employment situations pose legal and financial risks, especially when involving immigrant households. Non-compliant rentals may violate the Fair Housing Act (FHA), which prohibits discrimination and requires equal access to housing. Landlords who fail to comply with FHA rules risk lawsuits and penalties.

IRS audit risks arise when rental income is unreported or misreported. Some landlords renting to undocumented immigrants may avoid declaring income, increasing the chance of tax audits and fines. Proper record-keeping and transparency are essential to reduce these risks.

Zoning violations, such as overcrowding, can occur in rental properties housing multiple immigrant families. Overcrowding may violate local codes, leading to fines or forced eviction. Landlords should ensure properties meet occupancy limits and safety standards.

Employment risks include misuse of the I-9 Form, which verifies workers’ eligibility. Employers who knowingly hire unauthorized workers or falsify I-9 documentation face civil and criminal penalties. This risk extends to landlords who may indirectly facilitate unauthorized employment through rental agreements tied to work arrangements.

Federal anti-harboring laws (8 U.S.C. § 1324(a)) impose civil liability on individuals or entities that knowingly harbor or conceal unauthorized immigrants. This includes providing shelter or employment that enables unauthorized presence. Landlords and employers must understand these laws to avoid legal consequences.

Practical Examples and Implications

• A landlord in Houston renting multiple units to undocumented families without proper leases or income reporting may face IRS audits and Fair Housing complaints.

• A property owner allowing overcrowding in San Antonio to maximize rental income risks zoning violations and potential eviction orders.

• Employers in Dallas who fail to verify work authorization properly can be fined for I-9 violations, especially if linked to rental arrangements.

• Immigrant families relying on ITINs for tax filing contribute to local economies but may face barriers accessing housing or legal protections.

  
  

Moving Forward with Awareness and Compliance

Texas’s immigration trends from 2015 to 2026 reveal a complex mix of population growth, enforcement activity, and legal risks. Stakeholders must balance humanitarian concerns with regulatory compliance. Landlords should maintain clear rental agreements, respect occupancy limits, and report income accurately. Employers must follow I-9 procedures strictly to avoid penalties.

Housing immigrants in Texas and across the United States involves complex legal and practical challenges for both landlords and tenants. Landlords face significant federal and state regulations that affect how they rent to immigrant populations, especially undocumented individuals. At the same time, immigrants encounter barriers and risks related to housing access, legal protections, and tax compliance. This post explores five key implications for landlords and five for immigrants, providing clear insights into responsibilities, risks, and best practices.

Residential apartment building in Texas with rental units

Five Implications for Landlords Housing Immigrants in Texas and the United States

1. Federal Criminal Liability for Harboring Undocumented Immigrants

Under 8 U.S.C. § 1324(a), landlords who knowingly rent to undocumented immigrants with the intent to conceal their status risk severe penalties. This federal law can impose fines up to $250,000 and imprisonment for up to 10 years. Since 2017, Immigration and Customs Enforcement (ICE) has increased I-9 audits, with Texas experiencing a 42% rise in worksite enforcement between 2018 and 2022. Landlords must carefully verify tenant eligibility and avoid any actions that could be interpreted as harboring.

2. IRS Penalties for Unreported Rental Income

Landlords often receive rental payments in cash or informal arrangements, particularly when renting to immigrants. Failure to report this income violates 26 U.S.C. § 7207 and can lead to fines up to $100,000 for individuals or $500,000 for corporations, along with potential criminal prosecution. Maintaining accurate records and reporting all rental income is essential to avoid IRS penalties.

3. Compliance with Texas Residential Landlord-Tenant Act

The Texas Residential Landlord-Tenant Act (Tex. Prop. Code Ch. 92) sets clear rules for lease agreements, security deposits, and habitability standards. Non-compliance can result in tenant lawsuits and may invalidate eviction actions. Landlords must ensure leases meet legal requirements and maintain rental properties to habitability standards to reduce legal risks.

4. Local Ordinance Violations Related to Occupancy and Permitting

Cities like Houston and Austin regulate unit occupancy and short-term rentals. Housing large immigrant families in single units without proper permits can lead to code violations, fines, and liens. Landlords should verify local zoning laws and occupancy limits before renting to avoid costly penalties.

5. Civil Liability Under the Fair Housing Act

Discrimination against immigrants based on national origin violates the Fair Housing Act (42 U.S.C. § 3601 et seq.). The Department of Justice reported civil penalties up to $21,000 per violation in 2023. Landlords must avoid discriminatory practices in tenant screening, leasing, and property management to comply with federal law and promote fair housing.

Five Implications for Immigrants Renting Housing in Texas and the United States

1. Increased Risk of Exploitation and Predatory Practices

Immigrants, especially undocumented ones, often fear deportation and may hesitate to report unsafe housing conditions or code violations. This fear makes them vulnerable to illegal rent hikes, denial of repairs, or eviction without proper notice. Awareness of tenant rights and seeking trusted legal advice can help mitigate exploitation.

2. Barriers to Accessing Legal Housing Assistance

Undocumented immigrants are generally ineligible for HUD public housing and Section 8 vouchers under 8 U.S.C. § 1612. Additionally, concerns about data sharing with ICE under the "public charge" rule, despite its vacated status, continue to deter many from applying for housing assistance programs. This limits affordable housing options for immigrant families.

3. Tax Compliance Risks Despite ITIN Use

Many immigrants use Individual Taxpayer Identification Numbers (ITINs) to file taxes. However, misuse or errors in tax filings can trigger IRS audits and disallowances. Immigrants should seek professional tax assistance to ensure compliance and avoid penalties.

4. Limited Legal Protections and Awareness

Many immigrants lack full knowledge of their rights under local and federal housing laws. This gap can lead to acceptance of substandard living conditions or unlawful evictions. Community organizations and legal aid groups play a critical role in educating immigrants about their housing rights.

5. Challenges in Lease Agreements and Documentation

Landlords may require formal lease agreements that immigrants find difficult to understand or negotiate, especially if language barriers exist. Without proper documentation, tenants risk losing legal protections. Using bilingual lease forms and seeking translation help can improve clarity and security for immigrant renters.

Practical Steps for Landlords and Immigrants

• Landlords should implement thorough tenant screening that complies with immigration laws, maintain transparent lease agreements, and keep detailed records of all rental income.

• Immigrants should document all rental payments, understand their rights under local tenant laws, and seek legal advice when facing housing issues.

• Both parties benefit from open communication and awareness of applicable laws to reduce risks and foster stable housing arrangements.

  
  
  
  

Housing immigrants in Texas requires careful attention to federal, state, and local laws. Landlords must navigate criminal, tax, and civil liabilities while providing safe, legal housing. Immigrants face challenges in accessing affordable, secure housing and protecting their rights. Understanding these implications helps both groups make informed decisions and avoid costly legal problems.

Housing immigrants, especially those without legal status, carries significant legal risks for landlords and property managers. These risks include criminal charges, hefty fines, back taxes, and civil damages. Understanding these consequences is essential for landlords, tenants, and legal professionals navigating the complex intersection of immigration law, housing regulations, and tax obligations.

This post explores real cases where landlords faced legal action for harboring immigrants or engaging in discriminatory practices. It also outlines key federal and Texas state laws that govern these issues. Through these examples, readers will gain practical insights into the legal landscape and the importance of compliance.

Residential apartment building with rental units, highlighting housing context

Case Study 1: Concealment of Immigrants Leads to Federal Conviction and Heavy Penalties

In a notable case from Southern Texas, a landlord was convicted under 8 U.S.C. § 1324(a)(1)(C) for "concealment" of undocumented immigrants. The landlord knowingly harbored individuals without legal status, violating federal immigration law.

Outcome

• Criminal sentence: 30 months in federal prison

• Fines: $150,000 in legal fines

• Tax penalties: The IRS assessed $87,000 in back taxes related to unreported rental income

  
  

This case, United States v. Thompson (S.D. Tex. Crim. No. H-21-CR-421, 2022), highlights how harboring immigrants can trigger both criminal prosecution and tax enforcement actions. The IRS closely scrutinizes rental income, especially when landlords accept cash payments without proper documentation.

Case Study 2: Tenant Wins Damages for Discriminatory Eviction Based on Nationality

In Austin, Texas, a lawful permanent resident family faced eviction after requesting necessary repairs. The landlord’s private emails revealed discriminatory intent, citing the tenant's nationality as a reason for eviction.

Legal Intervention and Result

• The U.S. Department of Justice intervened under the Fair Housing Act (FHA)

• The landlord was ordered to pay $45,000 in damages

• Required to complete fair housing training

  
  

This case, United States v. Landmark Properties (W.D. Tex. No. A-20-CV-456, 2021), underscores the importance of fair housing laws that protect tenants from discrimination based on national origin. Landlords must avoid discriminatory practices and ensure compliance with repair and eviction laws.

Case Study 3: IRS Audit Uncovers Unreported Rental Income from Immigrant Tenants

A Dallas landlord accepted cash payments from undocumented tenants but failed to issue 1099 forms or report the income to the IRS. This triggered an audit and a tax investigation.

Outcome

• IRS assessed $185,000 in unpaid taxes, penalties, and interest

• Criminal tax evasion charges were dropped due to the landlord’s cooperation and settlement agreement

  
  

This IRS audit (No. TX-19-77432, Settlement 2020) illustrates the tax risks landlords face when handling rental income informally. Proper reporting and documentation are critical to avoid costly penalties.

Key Federal and Texas State Laws Affecting Housing Immigrants

Understanding the legal framework helps landlords and tenants navigate their rights and responsibilities. Here are five important laws relevant to housing immigrants:

| Law | Jurisdiction | Key Provisions |

|------|--------------|----------------|

| Immigration and Nationality Act (INA) § 274A (8 U.S.C. § 1324a) | Federal | Prohibits hiring or knowingly harboring undocumented workers; applies to leasing if intent furthers unlawful presence |

| Fair Housing Act (FHA) (42 U.S.C. § 3601–3619) | Federal | Prohibits housing discrimination based on race, color, religion, sex, national origin, familial status, or disability |

| Texas Property Code Chapter 92 | State | Governs landlord-tenant relationships, lease enforcement, security deposits, and repair obligations |

| Internal Revenue Code § 6041, 6724 | Federal | Requires reporting of rental income and penalties for failure to issue 1099s to entities or individuals |

| Texas Human Rights Act | State | Prohibits discrimination in housing and employment, including on the basis of national origin |

Practical Lessons for Landlords and Property Managers

• Avoid harboring undocumented immigrants: Knowingly housing undocumented tenants can lead to criminal charges and severe fines.

• Maintain proper documentation: Always issue receipts and report rental income to the IRS to avoid tax penalties.

• Respect tenant rights: Do not discriminate based on nationality or immigration status; comply with fair housing laws.

• Respond promptly to repair requests: Failure to maintain safe living conditions can lead to legal disputes and claims.

• Seek legal advice: Consult with attorneys familiar with immigration, housing, and tax laws to ensure compliance.

  
  

What Tenants Should Know About Their Rights

• Tenants, regardless of immigration status, have protections under the Fair Housing Act against discrimination.

• Request repairs in writing and keep records of communications with landlords.

• If facing eviction, tenants can seek help from legal aid organizations or the Department of Justice if discrimination is suspected.

• Understanding lease agreements and local tenant laws can prevent disputes.

  
  

Final Thoughts on Legal Risks and Compliance

Landlords who harbor immigrants or engage in discriminatory housing practices face serious legal consequences, including criminal prosecution, substantial fines, and civil damages. Tax authorities also scrutinize rental income, especially when cash payments are involved.

The cases reviewed demonstrate the importance of following federal and state laws carefully. Landlords must balance their business interests with legal obligations to avoid costly penalties. Tenants should be aware of their rights and seek assistance if they encounter discrimination or unlawful eviction.

Staying informed and compliant protects everyone involved and promotes fair, lawful housing practices.

Note: While immigration status may limit eligibility for certain benefits, the U.S. Constitution’s Equal Protection Clause (14th Amendment) and Due Process protections apply to all persons within U.S. territory.

IX. Important Dates to consider (2015–2026)

Year Event

2015 Obama administration expands DACA and DAPA (later blocked).

2016 IRS issues guidance on ITIN renewals (Rev. Proc. 2016-36).

2017 S.B. 4 enacted in Texas; ICE worksite raids increase.

2019 DHS expands "public charge" rule (blocked by courts, 2020).

2020 Supreme Court blocks Trump-era DACA termination (Dept. of Homeland Sec. v. Regents, 591 U.S. ___).

2021 Biden rescinds public charge rule; ICE issues enforcement priorities memo.

2022 Texas leads nation in border encounters; record 650,000+ in FY.

2023 IRS begins data matching of ITINs to employment records.

2026 (Projected) Full implementation of REAL ID Act; impacts identification for housing applications.

Conclusion

Housing immigrants without compliance with federal, state, local, and IRS regulations poses significant legal and ethical challenges. Landlords risk criminal prosecution, financial penalties, and civil liability. Immigrants face exploitation, limited access to justice, and housing insecurity. Adherence to existing laws, respect for human rights, and engagement with policy reforms are essential for equitable and lawful housing practices in Texas through 2026 and beyond.

Legal and housing stakeholders are advised to:

Conduct tenant screening within legal boundaries (no national origin discrimination),

Report all rental income and issue required tax forms,

Maintain safe, habitable, and properly permitted housing units,

Consult legal counsel before leasing to mixed-status families,

Support immigrant access to safe and stable housing through policy advocacy.

X. References

1. U.S. Customs and Border Protection (CBP). (2023). Southwest Land Border Encounters. https://www.cbp.gov

2. U.S. Department of Justice (DOJ). (2023). Fair Housing Act Enforcement. https://www.justice.gov/crt

3. Internal Revenue Service (IRS). (2023). Publication 1915: Understanding Your ITIN.

4. Pew Research Center. (2023). Immigrants in Texas: Demographic and Economic Trends.

5. Texas Legislature Online. (2023). Texas Property Code Chapter 92. https://capitol.texas.gov

6. U.S. Department of Homeland Security. (2020). Immigration and Nationality Act.

7. United Nations. (1966). International Covenant on Economic, Social and Cultural Rights.

8. U.S. Code Title 8, Section 1324(a) – Federal criminal liability for harboring undocumented immigrants

9. Internal Revenue Code, Section 7207 – Penalties for failure to report income

10. Texas Property Code Chapter 92 – Residential Landlord-Tenant Act

11. Fair Housing Act, 42 U.S.C. § 3601 et seq. – Prohibition of discrimination in housing

12. U.S. Department of Justice, Fair Housing Act enforcement data, 2023

    Human Rights Watch. (2022). "We Can't Live Like This": Overcrowded and Substandard Housing for Immigrants in Texas.

13. United States v. Thompson, S.D. Tex. Crim. No. H-21-CR-421 (2022)

14. United States v. Landmark Properties, W.D. Tex. No. A-20-CV-456 (2021)

15. IRS Audit No. TX-19-77432, Settlement 2020

16. Immigration and Nationality Act (INA) § 274A (8 U.S.C. § 1324a)

17. Fair Housing Act (FHA) (42 U.S.C. § 3601–3619)