WHEN A FAX IS TRYING TO COME THRU, IT RINGS, THEN BEEPS AND SAYS "RECEIVE ERROR"

Step by step information at the link below.
Brother Fax T96
The F/T Mode is used to allow the fax machine and the telephones to share the same telephone line. When a call comes in, the fax machine and all extension telephones on that line will ring according to the number of rings you have set for the Ring Delay.
When the Ring Delay is completed, the fax machine will answer the call and determine if it is a fax call or a telephone (voice) call.
The fax machine can determine this by the signal it is receiving on the telephone line. If someone is sending a fax automatically , the sending fax machine will transmit a fax tone (a series of beeps every 3 seconds).
If your fax machine hears these tones, it will receive the fax.

If the fax machine does not hear any fax tones, it assumes it is a telephone (voice) call and will begin ringing the F/T ring tones (double ring) for the length of time you selected for the F/T Ring Time. These tones will only ring on the fax machine's handset (extension or external phones will not ring). At the end of the F/T ring time the fax machine will go into the receive mode in order to receive a manual fax.
(If the call was a voice call and was not answered, the caller will hear the fax receive tones also).

• If you answer the call before the fax machine(during the ring delay period) and determine it is a fax, you can transfer the fax to the fax machine for receiving.
  
  
• If you answer the call on an "extension" phone and hear a beep every 3 seconds (automatic fax) or silence (manual fax), press *51 or *91 for New Zealand (remote activation code) on the telephone keypad, wait to hear the fax machine turn on (chirping sounds) and then hang up.
  
  
• If you answer on the handset of the fax machine and hear a beep every 3 seconds or silence, press the Fax Start or Start/Copy key on the control panel of the fax machine and then hang up the handset.
  
  
• If you answer a call on an "extension" phone during the F/T Ring Time, you will hear the F/T ring tones.
  To release the call from the fax machine, press #51 or #91 for New Zealand (remote deactivation code) on the telephone keypad and you can speak to the calling party.
  
  
• If you pick up the handset of the fax machine during the F/T ring time, you may talk to the calling party immediately.

First, Connect the Phone line in Line 1 EXT at back of printer

Check the No. of Rings on your Answer machine.
If you have 4 Rings set on Answer machine then you need to set 6 Rings on the printer ( as simple 2 rings more than your Answer machine )
And you need to turn off ECM on the Printer setup

Press Setup button
Scroll till you find Fax Settings - Press OK
Choose Rings to Answer - Set it - 6 ( based on the Rings on Answer machine ) - Press OK
Check for ECM - Error Correction Mode - Press OK
Turn it OFF - Press OK
Check for Auto Answer option - Turn it ON too.

Try to receive Fax.. it should come thru.

it's most likely the compression on the phone line or you need to set up your fax machine for proper receive mode.
Contact your phone service provider to see if they support faxes.
(Faxes cannot handle nearly as much compression as standard voice)

The fact that the phone was ringing and the fax answered the call doesn't necessarily mean, that it was a fax transmission; someone might have called your number and tried to talk, but hung up hearing the fax beep.
You have to ask someone with a working fax machine to try and send you something, then you will be sure whether your fax works fine or not.
If this check will prove that it's indeed your machine that has some issue, then look for any error lights or messages on the display. If there was something wrong with paper, printing head, drive or whatever, you would certainly get some error message.

You have to enable automatic fax receive in setup.

If you have an answering machine, have it answer at three rings. Have the fax answer at five rings. Let the answer machine go thru it's cycle, and see if the fax picks up.

When you set your fax machine to answer on a certain number of rings it will answer it on that number of rings expecting it to be another fax machine. If you do not answer it before the aloted number of rings you will not be able to talk since the fax machine will be trying to talk in computer speak. To help you may want to set it to answer after more rings.

can you send a fax out?

Try changing the receive mode from automatic to FAX ONLY and set the number of fax rings higher. You should be able to receive phone calls and if you are not answering your phone it will automatically receive a fax.

When the last page of your document has been sent successfully, the machine beeps and returns to Standby mode. When something goes wrong while sending your fax, an error message appears on the display. If you receive an error message, press Stop/Clear to clear the message and try to send the document again. You can set your machine to print a confirmation report automatically each time sending a fax is completed. If you get the error message write it down it should always supply an error message if the fax did not go through.