Reports earlier in the week linked the Eagles with a £450,000 move for the League Two player, as Taylor looks to bolster his defence.
Hughes plays at left-back, and could prove to be a replacement for Danny Granville who is unlikely to be retained once his contract expires at the end of the season.
Taylor told the Croydon Advertiser: "We have had him watched. I tracked him when I was at Hull, and he is a decent player.
"But I don't know where the reports have come from, so I'd better give my scouts a bit of a grilling."
However, Lincoln City director of football John Deehan insists his club have received no offers for the highly rated 22-year-old.
Deehan told the Lincolnshire Echo: "At this stage of the season there is a lot of talk with regards to players moving on in the summer."
"But I can honestly say there has been no official approaches to myself or the football club with regards to Jeff."