In a move that has surprised many, the Internal Revenue Service on Thursday auctioned off a large swath of land owned by the Crow Creek Sioux Tribe to help pay off more than $3 million in back taxes, penalties and interest. The Tribe says the sale is illegal under federal laws protecting Indian land.

The 7,100 acres of tribal land in central South Dakota ranch sold for almost $2.6 million, less than the $4.6 million it was appraised at, said IRS spokeswoman Carrie Resch.

The tribe filed a lawsuit Monday in U.S. District court in Pierre seeking to block the sale. Judge Roberto A. Lange declined their request but promised to schedule a trial to hear the tribe’s arguments.

The land in question was part of the tribe’s original reservation established in an 1868 treaty, and was held by the federal government in a trust for the tribe. But it was eventually allotted to individual tribal members, who then sold it to non-Indians.

The tribe bought the ranch back in 1998 but the Bureau of Indian Affairs did not put the land back into trust, which would have protected it from seizure, Tribal Secretary Tommy Thompson said.

Lawyers say the tribe can purchase the land back during a 180-day redemption period, and the land will not change possession during that time. A trial is tentatively set for March 29-30, which is within the redemption period.

According to the lawsuit, the IRS was auctioning the land to recover more than $3.1 million in federal employment taxes owed by the tribe. The tribe didn’t pay the taxes because it was told, erroneously, by an official connected to the BIA that federally recognized tribes do not have to pay the taxes, according to the lawsuit.

The tribe contends the IRS cannot legally seize and sell the land because it is owned by Crow Creek Tribal Farms Inc., a corporation set up by the tribe that is not legally responsible for settling the tribe’s tax debts.

Buffalo County, which encompasses the Crow Creek reservation, is consistently listed by the U.S. Census Bureau as one of the poorest counties in the nation. The Census Bureau reported that more than 39% of the county’s population lived in poverty in 2005. The county had a 20% unemployment rate in October, four times higher than the state average.