If you’re a US citizen in Australia, you’ve probably already heard about this case. The case involves Larry Williams, an American futures trader, who was apprehended in Australia. The IRS alleged that he had evaded taxes to the tune of 1,5+ million.
The story is here: http://www.mainstreet.com/article/moneyinvesting/
You can find the conclusion here in the comments section (from 2010):
The most disheartening part about this case is that Larry Williams had to go through this ordeal. He was arrested, had to pay attorneys, listened to people accusing him of being a tax cheat, only have almost all of the charges dropped. The only charge that “stuck” was a charge for “failing to file.”
I don’t know the background of this case, or how Larry Williams ended up on the IRS radar, but I DO think some restitution is in order when the IRS makes someones’ life a living hell and the strongest case they have is “failing to file.” This begs the question, “is US citizenship worth it?” I don’t think so. But if you decide to keep it, be sure to file all of the necessary documents with the IRS.