How is the IRS associated with the banks?

The IRS is not legally linked with the banking industry. The IRS uses banking information that is given them when you have interest earned on a bank account. The banks report the interest via a 1099 INT. The only time the IRS will use that information is when you have been negligent in paying your taxes. Part of the due collection process of the IRS is to issue bank levies against your account and collect all the money in your account for that one instant in time when the levy is issued. To avoid a bank levy when you owe back taxes you must be in a resolution with the IRS for the taxes you owe.