dissenting:
Because of the chilling effect of the majority’s decision on the integrity of the judicial bail system, I must dissent.
The district court was faced with the choice, upon exoneration of the bond, of releasing bail proceeds (1) to their owner, the entity (admittedly not the defendant) which actually posted the bond with its own funds (including loan proceeds), or (2) to a creditor of the defendant, with absolutely no enforceable interest in the funds, which happens to be the Internal Revenue *758Service (IRS). The majority concludes that the exonerated bail simply should be paid to the IRS, which filed a levy upon the bond, thereby making new law for the circuit. I disagree. I would remand for the purpose of holding a hearing to determine whether the collateral delivered to the court by a third party includes any “property ... belonging to [the taxpayer]” under 26 U.S.C. § 6331.
Supervision of the bail system lies within the inherent power of the court to call an accused to stand trial. See United States v. Smith, 444 F.2d 61, 62 (8th Cir.1971) (per curiam), cert. denied, 405 U.S. 977, 92 S.Ct. 1205, 31 L.Ed.2d 253 (1972). The courts clearly have a deep interest in preserving the viability of the bail system in order to assure the attendance of criminal defendants at trial, and should be most reluctant to countenance interferences with that system. Indeed, there is a civil liberties interest as well; when a third party comes to the aid of a defendant by posting bond on his behalf, the court has a duty to honor such trust.
If the IRS is permitted to use the federal judiciary as a “quasi-collection agency” (in the words of the district court), criminal defendants will have less incentive to appear once a bond has been posted. Criminal defendants who are delinquent taxpayers may be certain that any monies deposited by them with the court will not be returned to them, whether or not they appear before the court. Prudent third parties, even those without close financial connections to the defendant, will be chary of providing defendants with bail funds, or at least will be forced to exact higher premiums or to impose greater collateral requirements, contrary to the public policy inherent in the Bail Reform Act.
There is no need for the court to adopt the approach espoused by the majority today. True, it is often stressed that an available procedure for contesting an IRS levy, as opposed to any other sort of levy, is to bring a civil action under 26 U.S.C. § 7426. See, e.g., Winebrenner v. United States, 924 F.2d 851, 853-55 (9th Cir.1991). I do not believe that Congress, in enacting the levy statutes of the Internal Revenue Code, foresaw their use to harass third parties and to interfere with the smooth functioning of the courts. There appears to be no reason why the IRS cannot simply levy upon the property once it is in the possession of Capital Tracing, Inc., the record owner, immediately upon release from deposit with the court; if the IRS indeed has an enforceable interest in the funds it can be adjudicated promptly in the customary fashion without complications involving the bail system and separation of powers. There is no danger of a federal district court attempting to hide the money from the IRS. The automatic lien against a delinquent taxpayer’s property still protects the agency from fraudulent conveyances should the taxpayer in fact have an interest in property temporarily insulated from seizure by deposit with the district court. See United States v. National Bank of Commerce, 472 U.S. 713, 719, 105 S.Ct. 2919, 2923, 86 L.Ed.2d 565 (1985).
The authorities do not command the result reached by my colleagues. We have never held that the IRS may levy upon property posted as a bail bond, even assuming, unlike here, the posting party was the taxpayer.1 Even assuming that we would be inclined to follow it, no extra-circuit precedent commands the result reached today.
United States v. Doyal, 462 F.2d 1357 (5th Cir.1972) (per curiam), upon which the majority places great reliance, is clearly distinguishable. In that case, the criminal defendant posted $3,500 in bail with the district court. Id. at 1357-58. In contrast, Badger did not deposit any of his money with the district court, and has disclaimed all interest in the bail funds posted for his benefit. Thus, we learn little applicable to our case from the Fifth Circuit’s ruling in Doyal that no exception to the Internal Revenue Code’s anti-injunction provision, *759section 7421(a), applies when a criminal defendant attempts to restrain enforcement of an IRS levy. See id. at 1358.
Other authority directly supports my view. Bankers’ Mortgage Co. v. McComb, 60 F.2d 218 (10th Cir.1932), although cited by the majority for the proposition that the court simply should have complied with the levy, in fact holds to the opposite effect:
But when the conditions of the bail bond have been fully met and the whole of the bond or notes deposited, or a residue thereof, remains in the hands of the clerk, a court in a proper proceeding may and should inquire into the true title thereto as between third persons and the defendant or his creditors, and direct that they be delivered to the true owner.
Id. at 222 (citations omitted). Similarly, in United States v. Eschweiler, 782 F.2d 1385 (7th Cir.1986), the court upheld the district court’s denial of defendant’s motion to exonerate while explicitly upholding the district court’s jurisdiction to determine the validity of the levy. See id. at 1392-93.
Our test for determining when a district court should hold a hearing to settle a bail bond dispute is well-settled. In United States v. Arnaiz, 842 F.2d 217 (9th Cir.1988), we concluded that a district court attempting to exonerate a bail bond pursuant to rule 46(f) had jurisdiction to resolve disputes over the collateral posted to obtain the bond, but not over the premium paid (or due) to obtain the bond. Disputes between defendants and their sureties over the premium, we observed, were merely “contractual” and would not affect the certainty of a defendant’s appearance in court. See id. at 220. In contrast, a dispute over return of collateral is “so inextricably linked with the exoneration order that it must be considered to be within the district court’s jurisdiction.” Id. at 221. We emphasized that the bond exoneration rule specified that “obligors” were entitled to the return of their security, see Fed.R.Crim.P. 46(f), and that “collateral st[ands] in the same position as if it had been posted directly with the court.” See 842 F.2d at 221. Significantly, we noted that “the court’s statutory duty of ‘releasing] any bail’ could not be fulfilled without a determination of which party was entitled to receive it.” See id. at 222 (brackets in original).
It seems clear to me that the district court here was also faced with the question of which party, the IRS or the original depositors, was entitled to receive the cash bail. The IRS’s virtual confiscation of bail bonds will clearly impact the certainty of a criminal defendant’s appearance in court: the mere threat of an IRS levy will discourage defendants and third parties from locking substantial funds away with a court which will not return them upon completion of the defendant’s obligations. Arnaiz authorizes district courts to adjudge the validity of an IRS levy on deposited property.
I would remand to the district court with instructions to hold an Arnaiz hearing to determine who is entitled to the deposited cash bail.
Therefore, I respectfully dissent.
. We have permitted IRS levies upon property involuntarily seized pursuant to a criminal proceeding and held by a district court. See United States v. Freedman, 444 F.2d 1387, 1388 (9th Cir.), cert. denied, 404 U.S. 992, 92 S.Ct. 538, 30 L.Ed.2d 544 (1971).