Gabriel Calderon pleaded guilty to selling red-stamped cigarettes at his Itz Lit Smokeshop with intent to evade taxes — a class five felony — and accepted a plea agreement. 

This criminal investigation was a joint effort of the Tobacco Enforcement and Criminal Investigations Units at the Arizona Department of Revenue.

As part of the plea agreement with the state of Arizona, Calderon has agreed to pay the following in restitution:

  • $4,872.76 to the Arizona Department of Revenue

  • $2,000 to the attorney general’s anti-racketeering revolving fund.

The plea agreement also stipulates that Calderon be sentenced to probation. Calderon further agreed to cooperate in any civil audit conducted by the Arizona Department of Revenue.

The Glendale store smoking- and tobacco-related products, including cigarettes. During a routine tobacco inspection, ADOR’s tobacco investigators discovered various brand packs of red-stamped cigarettes were on display for sale during a retail tobacco inspection. Red-stamped cigarettes may only be sold on reservation land by a retailer owned by the governing tribe or a member of that tribe.

Investigators found that between May 1, 2019, and Aug. 31, 2019, the entity filed false transaction privilege tax returns, and between Oct. 1, 2019, and July 31, 2020, the entity failed to file transaction privilege tax returns altogether. From May 1, 2019, through July 31, 2020, the business’ transaction privilege tax returns liability was $4,634.76. 

The state of Arizona, Maricopa County and city of Glendale all impose transaction privilege tax returns, Arizona’s version of sales tax, on sales of certain smoke products.

On Jan. 20, the state grand jury indicted Calderon and his Roadsidetechaz LLC — doing business as Itz Lit Smokeshop — with 16 class 5 felony charges related to the business’ transaction privilege tax returns liability.