Taylor has endured an injury-ravaged 12 months at Portman Road, following a switch from Peterborough United.
The 25-year-old has worked hard to rebuild his fitness, but McCarthy feels he needs regular games to compete at a Championship level - something he cannot be guaranteed at Ipswich.
McCarthy said in the Green Un: "He needs minutes on the pitch more than anybody, but it's just not fallen right for him.
"The team is playing well and he just can't get on. We'll just have to keep monitoring that one."
Asked if Taylor could be loaned out in order to get minutes under his belt, McCarthy added: "I haven't got the squad big enough really. I don't know, we'll see.
"I'm saying he needs minutes, but how do you get them? Playing for the Under-21s? They're not great games because they are not as competitive as they should be. We'll see, we'll just keep a close eye on that one."
Meanwhile, McCarthy has revealed that former Town frontman Lee, who has returned to the club to work with their academy, could force his way into a matchday squad if he maintains the standard he has shown in training.
He said on the 35-year-old: "He's been training well.
"I don't think he's going to be running down channels and all over the place, but he keeps the ball up the pitch and doesn't allow it to come back. I don't know whether he could do that for 90 minutes, but he's a good target man and he's actually got a goal in him too if you put crosses in the box."
He added: "I've just said that Paul Taylor is unlikely to get on the pitch because of the way we've been playing though, so it's probably unlikely for Alan as well at the moment."