I'm afraid that part of this issue is that you've been non-compliant with US taxes for a while if I understand this correctly? This is my take on it, given non-compliance:

If you had been filing regularly and paying US taxes regularly, then you would have paid tax on your contributions and your employer contributions when putting it in to pillar II. It could then not be so-called double taxed when taking it out, at least the main basis. Interest is the other issue.

So your case is more complicated and its not clear what the CPA is trying to do now. I guess the easiest would be to file back tax forms and payments for the contributions and then the majority of distribution would not be taxed, but not sure if this is possible legally now or not. I assume the CPA should know this if you have one specialised in this. I would think few people here would have the same situation as you, as we got advice upon coming to CH and paying the right taxes at the time.