The IRS’s Criminal Investigation unit in Mexico said it has located 79 tax fugitives in Mexico and Central America.
In an October 6 release, the IRS said the fugitives are subject to possible extradition to the United States. Eight of the individuals have already been apprehended, it said. The IRS initiative also targets fugitives in Belize, El Salvador, Guatemala, and Honduras.
“We are going after anyone who thinks they can cheat the government and simply flee to the south," said IRS-CI Mexico City attaché Jaushua Brewer. "Now, with so much help from our host country partners, it is even harder for criminals to escape justice."
Reuters reported October 6 that the cooperation was made possible in part by a 2020 amendment to Mexico’s criminal code that made tax evasion a felony offense.
The IRS disclosed the names of only two of the individuals identified under the initiative. It said Jose L. Echeverria, formerly of Chelan Falls, Washington, was extradited in February to serve a 30-month prison sentence for filing a fraudulent tax return. He had been a fugitive for nearly five years until his arrest in Mexico.
Thomas Johnson, formerly of Tampa, Florida, was arrested in Belize in January and extradited to the United States. “Johnson allegedly prepared and filed false tax returns on behalf of his clients, and they in turn split large refunds they were not entitled to with him,” the IRS said.
Enrique Hernández-Pulido, a lawyer with Procopio, Cory, Hargreaves & Savitch in San Diego, said Mexico’s federal tax code includes a provision that allows the Tax Administration Service (SAT) to cooperate with its foreign counterparts in the collection of a foreign tax. “Mexico’s 2019 criminal tax reforms also made extradition easier,” he said.
Hernández-Pulido said Mexico’s willingness to extradite people sought by the United States for tax evasion depends on the overall relationship between the two countries. “These are tokens that are used to nourish or manage the overall U.S.-Mexican relationship,” he said. “Sometimes a quid pro quo is involved."
Trade Dispute Could Affect Extraditions
One possible area of friction involves changes to Mexican law in 2021 that the U.S. government claims give an unfair advantage to Mexico’s state-owned Federal Electricity Commission over private companies, some of which are owned by U.S. businesses.
Mexican President Andrés Manuel López Obrador has pushed through other changes that favor Petroleos Mexicanos, the state-owned oil and gas company, by relaxing its deadlines for complying with more stringent environmental regulations and making it more difficult for private companies to compete for drilling permits. Both the United States and Canada have complained that Mexico is violating the United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement in 2020.
Hernández-Pulido said the October 7 announcement that SAT chief Raquel Buenrostro will take over the Ministry of Economy could signal that Mexico will take a tougher stance in its relations with the United States over the energy issue. The previous economy minister, Tatiana Clouthier, who resigned abruptly October 6, reportedly was unhappy that she had to defend positions that she considered incompatible with Mexico’s obligations under its trade treaty with its neighbors to the north.
Buenrostro’s reputation as a tough administrator at the SAT might carry through to the Ministry of Economy, Hernández-Pulido said. “It was rumored that the former economy minister was too soft,” he said. “With Buenrostro there, it might affect the relationship with the U.S.”