Perl passes everything to your subroutine in the @_ array, so it can't tell where one hash ends and the other begins. Everything will end up in your first hash, as you've found.

TIMTOWTDI, but probably the easiest is to pass references instead:

sub register {
    my ($eref, $fref) = @_;
    my %error = %$eref;
    my %FORM = %$fref;
# ...
}
#
#  Call it like so:
#
register(\%error, \%FORM);
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HTH