According to 'Kicker', the defending German champions will reject the option to sign the Colombian playmaker, meaning he will return to the Bernabeu.
The option-to-buy clause is completely in the hands of Bayern board members, whose summer transfer budget of €200m does not include the €42m needed to sign the former Monaco man, according to the German publication.
The current situation is the complete opposite to that which James enjoyed last season, in which he scored eight time and registered 13 assists in 39 appearances.
However, since the arrival of Miko Kovac he has fallen out of favour, and has played barely two-thirds of his side's minutes in the league so far this season.
It seems as though the Croatian coach is frustrated at what he sees as a lack of discipline from the Colombian, and will therefore not look to include him in his plans going forward.