As a sales representative for a direct sales company, you have an obligation to report income earned through that business for tax purposes. At tax time, the direct sales company will send Form 1099-MISC with Box 9 checked (if value is above $5,000) and would report any prizes/incentives as Box 3 or Box 7 income. A copy of that 1099-MISC also goes to the IRS.
To report business income on your tax return, the IRS requires you to file a Schedule C. That schedule must list all of your income for your direct sales business (along with the information from Form 1099-MISC). See the IRS Tax Tips for Direct Sellers for more details.
Even if you never receive Form 1099-MISC, you are required to report all income accurately to the IRS.