diff --git a/c64/kernal/errors.s b/c64/kernal/errors.s
index e1642238..e7bc9547 100644
--- a/c64/kernal/errors.s
+++ b/c64/kernal/errors.s
@@ -75,6 +75,17 @@ kernalerror_ILLEGAL_DEVICE_NUMBER:
 
 	// FALLTROUGH
 
+#if CONFIG_IEC_JIFFYDOS
+
+kernalerror_IEC_TIMEOUT_READ:
+
+    lda #K_STS_TIMEOUT_READ
+	skip_2_bytes_trash_nvz
+
+	// FALLTROUGH
+
+#endif // CONFIG_IEC_JIFFYDOS
+
 kernalerror_TOP_MEM_RS232:
 
 	lda #K_ERR_TOP_MEM_RS232
diff --git a/c64/kernal/iec_fast/jiffydos_rx_byte.s b/c64/kernal/iec_fast/jiffydos_rx_byte.s
index 13406df8..01473045 100644
--- a/c64/kernal/iec_fast/jiffydos_rx_byte.s
+++ b/c64/kernal/iec_fast/jiffydos_rx_byte.s
@@ -86,8 +86,11 @@ jiffydos_rx_byte:
 	// If CLK line active - success
 	bvc jiffydos_rx_byte_end
 
-	// XXX the DATA line can probably be used to distinguish between file not found error and normal stream EOI
+	// EOI or error, released DATA (highest byte set to 1) means error - see protocol analysis by Michael Steil, step R7a
+	lda CIA2_PRA
+	bmi jiffydos_rx_byte_error
 
+	// EOI - no error
 	jsr kernalstatus_EOI
 
 	// FALLTROUGH
@@ -109,5 +112,10 @@ jiffydos_rx_byte_end:
 	// End byte reception
 	jmp iec_rx_end
 
+jiffydos_rx_byte_error:
+
+	jsr kernalerror_IEC_TIMEOUT_READ
+	bcs jiffydos_rx_byte_end           // branch always
+
 
 #endif // CONFIG_IEC_JIFFYDOS
diff --git a/c64/kernal/iec_fast/jiffydos_tx_byte.s b/c64/kernal/iec_fast/jiffydos_tx_byte.s
index d600cc3f..e3ddcd06 100644
--- a/c64/kernal/iec_fast/jiffydos_tx_byte.s
+++ b/c64/kernal/iec_fast/jiffydos_tx_byte.s
@@ -100,6 +100,11 @@ jiffydos_tx_byte_wait_eoi:
 	sta CIA2_PRA
 	jsr iec_wait20us
 	lda C3PO
+	
+	// According to protocol analysis by Michael Steil (step S8) we should pull the DATA here
+	// to signal there was no error; but DATA pulled by the controller is a normal state
+	// (which should be stored in C3PO), so there is nothing to do here.
+
 	jmp jiffydos_tx_byte_finalize