Your niece has to file US taxes if she is a US Citizen declaring her 'world-wide" income on her US return. This includes all that she earns in Scotland, Italy and the US. She also needs to declare her financial accounts in Italy & Scotland equal to or more than $10,000. She may have to enter the Streamlined Process or the OVDP in order to bring her into Tax Compliance with the IRS if she is not compliant. The process determines how many years of income she will need to go back for and penalties if any. There are Earned Income exclusions and or foreign tax credits she may qualify for as well as tax treaty benefits which depends on her income etc. You can contact us at mnadig@mntaxbiz for further help.