Big discussion on this in the past. Don't remember the thread name and hasn't surfaced for awhile. An Argentine immigration lawyer who specializes in citizenship for people who are here without residency contributed significantly to the discussion.
Summary:
- You can only renew your visa once per year, and you cannot stay past 180 days under the on-arrival visa issued for most tourists. You do that at immigrations. Going to Colonia does not officially renew the visa.
- You are not illegal if you overstay your visa, but you are "irregular"
- Going to Colonia or any other location never renews your visa. It just puts a stamp in your passport.
- Too many trips and you may be noticed. If an immigrations official decides to flag you, a court will issue an order to your known place of residence (if they even have one, whether you are actually there any more or not) that says you have 30 days to "regularize" yourself.
- If you fail to regularize yourself in the 30 days (whether you received the order or not) and are still in the country, you will have a deportation order placed on you and probably the next time that you leave and try to get back in, you won't be able to for at least, I seem to remember someone mentioning, 5 years.
- No reports have been made of anyone who overstayed, paid the fine and had no other issues against them being denied entry into the country later.
Bajo_cero, the lawyer, was the one who laid these concepts out. I hope I got them right.
I knew of one person, a year or more ago, who was once denied entrance. I knew the person in passing and her fate was relayed to me by a good friend of hers who lives here. At the time, I didn't know what I laid out above, and only knew that she was not allowed in because she had made too many visa runs. I suspect that what I described above happened to her, but can't confirm it. I don't think I've ever heard of anyone else.
However, why take a chance? Pay the fine when you leave and that's that. I have a friend who lives out in the sticks, has been here for almost 7 years now, and has left the country and returned a few times. He's paid the tax and had no problems.
I used to make that "visa run" a few years ago, and even then I started getting a few comments from immigrations officials every once in awhile.
It's not worth it. Expensive and doesn't do anything but put you in immigration's sights.