Tait signed a four-year deal at Easter Road after the paperwork was lodged with the SFA at 11.58pm ahead of last Tuesday's midnight deadline, but the 19-year-old will remain at the Kirkcaldy club on loan until January.
Raith chairman and majority shareholder John Sim moved to clarify aspects of the deal amid criticism from sections of his support over the sale of a highly-promising prospect who had recently signed a contract extension to 2024.
In a lengthy statement posted on Raith's club website last night, Sim wrote: "Dylan’s agent advised me that Hibs were keen to sign him before the deadline and that Dylan and his family were very keen to accept the offer that had been made to him.
"Hibs had made a ridiculous offer which we rejected. It involved no money, but players in exchange.
“I reiterated that it was not our intention to sell at this time as we had no financial need.”
Sim added that he felt “there was no way the Raith manager [John McGlynn] would sanction a transfer” so late in the window before adding: “I was then advised that the agent had already spoken to the manager and that the manager would not want an unhappy player.”
The Stark's Park chairman continued: “We also agreed to seek a win-win as best as we could.
"After discussing our options we went back to Dylan’s agent and explained that unless we could keep him on loan until at least January we would not proceed as we did not have time to find a replacement.
“In our transfer negotiations we now expect a significant sell-on clause plus various incentives depending on how the player progresses. This was conveyed to Hibs, together with a requirement that the fee be increased.
“At this point it looked like the deal would not go through because Hibs said they saw him competing immediately for a first-team place.”
A compromise was reached involving Tait returning on loan – but discussions surrounding the loan back carried on until the early hours.
Sim added: “We are pleased for Dylan, but it is not a deal that we wanted to do.
"Had he the chance to play for us in the Premiership or an English club come in for him we would have expected the fee to be higher.
“We will receive more at the front end than has been quoted, with further significant payments to come if Dylan progresses in his career as we expect.”