The last sentence is problematic since she doesn't have a choice with regard to reporting "income" which the "reimbursements" are. Failure to report would be a violation of statute, which cannot be enforced via a contract, ie. you cannot enforce a contract to commit a crime, however you can be held to be a co-conspirator if you agree to the contract, and equally guilty of the criminal activity.

It's unclear from the narrative what her employment status is. Is she a 1099 contractor or a W-2 employee for US tax purposes?