I was working for an American sub-contractor. Their "accounting assistance" could very accurately be described as worse than rock dumb. They even withheld state tax from their corporate HQ state, even though the direct deposit was to a Texas bank. I learned a lot about tax treatment of income earned overseas, after the fact. The VAT hit was not that bad (personally), since most was re-imbursed as expenses that the company with the contract had to run down.
Sorry to hear about the rock dumb accounting, though I am glad you know different now. However, I do have some good news: you may be able to refile to correct your income tax filing. You might want to look into that. It could be worth the time you spend on the accounting.