Chairman David Sullivan confirmed the Hammers had offered Tevez, currently with Boca Juniors, a contract on £150,000 a week, which would have made him the highest-paid player in the club's history.
But the 32-year-old demanded much more, to the disappointment of Sullivan, although he remains confident a deal can be done.
"We tried to get Tevez but he wanted £250,000 a week. In his last year at Juventus, he was great. But 250 grand a week?" Sullivan told the Daily Mirror.
"He'll probably stay where he is now, but he doesn't pay a lot of tax down there."
Tevez is a huge favourite among the Hammers supporters after scoring seven goals in the final 10 games of the 2006-07 season to keep the club in the Premier League.
The player has always spoken of his fondness for the east London club but Sullivan is doubtful about the seriousness of such claims.
"All this business 'I love West Ham.' Well, it's 'I love West Ham if they give me 250 grand a week.' So how much love is that for West Ham?" Sullivan added.
"I actually offered him 150 grand a week to come back, plus bonuses.
"I thought that was an incredible offer for someone who loves West Ham. It wasn't a publicity stunt, I saw him being our No.1 striker.
"I was hoping he would reproduce what he did at Juventus a year ago. He was a fantastic player. But where do you draw the line with what you are prepared to pay?"
The Hammers, meanwhile, have agreed a deal to sign Turkey international winger Gokhan Tore from Besiktas.
Tore, who made 82 appearances and scored 12 goals for Besiktas, has joined on a season-long loan with a view to a permanent deal.
(Sky Sports)
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