Christina - there os a good chance the conversion was done without permits. If you really wanted to find out, you could go to the building inspector's office in your town, and pull up records for the house to see if permits were pulled.
My question is, why do you want to report it? Unless you are fearful that the wiring might be faulty, or there is some hazard.........if you like living there..........then continue to do so.
.As far as what your landlord does with the IRS and reporting the rental as income, it's her issue, not yours.....and as long as you have proof for your payments, you are covered.
Did the landlord do something to annoy you?
Oh..........I just noticed you asked this back in May! What did you wind up doing?
As far as reporting whether it is an illegal rental or not I cannot say. But if you like the apartment and paying the rent is the only issue I would not bother.